Having Confounded the Pundits,
eToys Confronts the Competition

Little eToys has shown it can hold its own on the Internet-commerce battlefield, but now the on-line toy store faces competition from Toys 'R' Us Inc., the industry's Goliath.

eToys launched its Web site, then offering more than 1,000 toys from more than 100 manufacturers, last October amid widespread skepticism that the company could do for toys what overnight sensation Amazon.com Inc. did for books. But in its first eight months, the Santa Monica, Calif., on-line retailer has proven its critics wrong, expanding steadily,...